Social capital networks, microcredit and poverty status of rural households in Nigeria

This study examined how social capital networks contribute to rural household poverty status in south-western Nigeria. A multistage sampling procedure was used to select a total of 300 households for this study. A structured questionnaire was used to obtain information and data were analysed using descriptive statistics, Foster, Greer and Thorbecke (FGT) poverty measure and Two-Stage Least Square model (2SLS). Results showed that poverty incidence, depth and severity were 60%, 46.70% and 20.10%, respectively, among the households sampled. The results indicated that social capital network forms in the study area include cooperative societies, family and friends, farmer associations, as well as professional, religious and microfinance groups. The results also showed that 66.00% of the households in the study area sourced microcredit from cooperative societies. The 2SLS estimate showed that the coefficient of the aggregate social capital index (β =730.83, p < 0.05) showed a positive, significant relationship with household per capita expenditure. The result indicated that a one-unit increase in social capital network index of the household would increase household per capita expenditure in the study area by NGN 730.83 (USD 1.92). The study concluded that social capital network membership positively affects the households’ access to microcredit and helps reduce poverty.